Real estate comps are crucial to your real estate investing business. Without knowing what a property is actually worth, you may over pay for a property OR even sell your property for much less than it is worth.
Using comps on real estate, you will make sure you are making good decisions when you buy and sell homes.
There are many ways to find the right real estate comps for your property, and we will look at all of those below.
First, we need to know what are real estate comps.
Comparable homes are located in the same area and similar in condition, number of bedrooms and bathrooms, square footage and other key features of the home.
This can also be a confusing part of the process of buying and selling houses.
With real estate comps, it is possible to determine the future
value of your property after you update the property. In projecting the future
value to your property there are many factors that need to be addressed.
The value of a property after it has been updated and fixed up is called the After Repair Value (ARV). The after repair value can be used even before you fix up the property to estimate the future value.
Let’s say you want to renovate your property and you want to upgrade the kitchen, bathrooms, or even a bedroom to sell your house at a higher price.
Using real estate comps, you can get estimated future value of the property by finding other renovated comparable properties in your area to determine what the future value will be.